5 Levels of Canadian Retirement Wealth in 2026 - Where Do You Stand?

Ajouté : 2026-05-31

[00:00:00]In this video, I'll be walking you through the five levels of Canadian retirement wealth in 2026. What each level actually means for your lifestyle, taxes, and planning challenges, and where most Canadians actually stand relative to the picture they have in their head. Through working with Canadians across the full range of retirement wealth, I've discovered that the planning challenges at each level are dramatically different. The issues facing a household at $800,000 are almost completely unrelated to the issues facing a household at $5 million.

[00:00:30]Even though both groups often look at the same generic retirement advice, that's why I made this video today to show you what actually changes at each level and help you focus on the strategies that matter for your situation instead of advice to side for someone in a completely different position. So, let's get right into it.

[00:00:48]Long covers the largest group of Canadian retirees. We're talking total retirement assets anywhere from very bobbous balances up to just under a million dollars spread across RRSPs, TFSAs, and sometimes non-registered accounts. At this level, the foundation of retirement income is your CPP and OAS. Personal savings are supplementary.

[00:01:08]They fill the gap between what those benefits pay and what life actually costs. A couple here might draw somewhere between 30 and $45,000 combined from CPP and OAS depending on their work history. and when they choose to start collecting and the portfolio does the rest. And this isn't a failed retirement. This is the most common Canadian retirement. Millions of households navigate successfully every year by building the right income system around what they have. But here's where the planning mistakes happen. The biggest challenge at level one isn't the portfolio. It's getting the CPP and OAS decisions right. Research from the National Institute on Aging and FP Canada Research Foundation has shown that the difference between taking CPP at age 60 versus waiting to age 70 is 122% indexed guaranteed for as long as you live. That's life-changing money.

[00:01:59]And yet, the Canadians who need to hold off on CFP the most are often the ones who take it earliest because they're making the decision in a silo without proper advice. Getting those foundational decisions right matters more at this level than almost any other planning move you can make. Level one is where the guaranteed income foundation is everything. Now, let me show you what changes at level two. Level two covers households with 1 million to $2 million in total retirement assets. This is what most Canadians picture when they think of a comfortable retirement. At this level, the portfolio is doing real work alongside CPP and OAS, supporting annual withdrawals of anywhere from 35 to $100,000 depending on the specific balance, how those assets are structured, a couple with $1.5 million portfolio and optimized government benefit timing and typically support 80 to $130,000 of annual retirement income comfortably across a 30-year retirement.

[00:02:56]Tax planning becomes a central priority here. OAS clawback which begins for 2026 income over $95,000 becomes a real consideration once RIF withdrawals start stacking on top of CPP and OAS in the early70s. For many households at this level with proper planning is avoidable but it doesn't happen automatically. Now the gap years the time between retirement and when government benefits start flowing are one of the most valuable planning windows you have.

[00:03:25]Choosing to hold off on CPP and OAS while drawing down the RRSP intentionally filing in lower tax brackets before mandatory minimums begin can make a meaningful difference in how much of that money you actually keep.

[00:03:38]The TFSA becomes more powerful here too, not as a default spending account, as a buffer for larger one-off expenses, for years where other income pushes you close to the clawback threshold, for situations where taking anything more out of the RIFF would land you in a higher tax bracket. Now, level two is where planning starts paying real dividends. The difference between a household that plans intentionally and one that doesn't can be significant over a 30-year retirement. Now, let me show you what happens at level three where the challenges shift again. So, level three is from roughly $2 million to $4 million in total retirement assets.

[00:04:14]Genuinely well off Canadian retirees. At this level, sustainability of withdrawals is rarely the concern. The questions shift to tax efficiency, OAS preservation, and what to do with surplus wealth. The OAS clawback becomes harder to avoid here. Once RIFF minimums start at age 72, the mandatory withdrawal rate begins at 5.4% of the account balance. Those withdrawals stack on top of CPP and OAS and any other income like pension income, for example.

[00:04:42]For households with significant rift balances, crossing the threshold can happen pretty quickly. That's why the window before age 72 is the most valuable claim window in retirement.

[00:04:52]Intentional RRSP drawd downs during the gap years filling lower tax brackets deliberately rather than waiting for mandatory minimums to force your hand can meaningfully shrink the rift balance before minimals begin and reduce clawback exposure for years to come.

[00:05:07]Income splitting matters here too. And the nuance is important. If you have a defined benefit pension, that income can be split between spouses at any age. But RIFF income only qualifies for pension income splitting at age 65 and older. So for households without a defined benefit plan where one spouse earns significantly more than the other, the early years of retirement can create a real problem. All the income is coming from one place and there's no clean way to divide it before 65. That's exactly where spas RSPs come in. Money that was contributed to Spzel RSP during the working years can now be drawn as income by the lower earning income spouse.

[00:05:45]evening out the household's income before pension splitting becomes available. If that piece wasn't built before retirement, it's worth understanding where you stand and what tools are still available. Now, charitable giving starts showing up at this level as well, and the strategy matters. Donating appreciated securities rather than cash eliminates capital gain that would have been triggered by selling while also generating the donation credit. It's one of the most effective tools available for people who are already giving. And there's one more piece that deserves attention at this level and it can be an uncomfortable one. When one spouse passes, the survivor files alone. So narrower tax brackets, only one CPP income, only one OAS income, but often the same riff obligations carrying forward. The income system needs to work for both the joint years and the years after. Planning for that scenario now is far easier than facing it without a plan later. And now that you see how the planning challenge has changed across the first three levels, if you'd like a professional second opinion on your own plan, there's a link below that takes you to a page where I explain who we work with and how our 60-minute retirement plan review works. After a few quick questions about your situation, it looks like a good fit, you'll be able to book a 15minute intro call with our team to talk about your next steps. So, level four is $4 million to $10 million in total retirement assets. At this level, the planning conversation shifts fundamentally. These households typically can't spend all their wealth in a lifetime under any reasonable set of assumptions, which means estate planning moves from a footnote to the center of the entire plan. The OAS clawback at this level isn't a problem to solve. It's an accepted feature of the situation. The focus moves to minimizing the broader tax burden across the full estate. And one strategy worth addressing directly at level four, the proactive RRSP draw down that makes so much sense at level two and level three often stops making sense here. The reason is that non-registered investment income, capital gains, dividends, interest is typically meaningful at this level. Net income is already filling the lower brackets during the early years of retirement. So there's often no room to layer in additional RRSP withdrawals at an advantageous tax rate. Every dollar that stays inside a registered account continues to grow tax deferred. For many households at this level, the better strategy is to leave the registered money alone for as long as possible.

[00:08:08]Take the tax deferral on the growth and manage the estate tax consequence through other tools rather than by forcing early withdrawals at a higher marginal rate. And that's where the deemed disposition rules start to matter significantly. When a Canadian passes away, the full balance of any RIFF is treated as taxable income on the final return or on the surviving SPEZ's final return. Depending on the size of that RIFF, 40 to 50% of that taxable income can go to CRA at 50% of capital gains on non-registered holdings, second property, a cottage, corporation, all landing on that same return in the same year. And the tax bill can be very large very quickly. This is where strategies like permanent life insurance start to make genuine sense, not as an investment or as a risk mitigation, but as a tax efficient mechanism to fund the estate obligation or transfer wealth to the next generation. Trust planning, lifetime gifting, and donating appreciated securities during your life all become part of the conversation. The planning at this level requires your financial planner, your accountant, and your estate lawyer working from the same page. When those pieces aren't coordinated, the estate pays for it later. Level four is where wealth transfer becomes the central planning issue. Now, let me walk you through level five, where the conversation shifts yet again. So, level five is 10 million or more in total retirement assets. At this level, retirement income from the portfolio is essentially not the question. A household here can typically live indefinitely on investment returns without ever touching principle. The focus shifts to multigenerational wealth structures, family governance, philanthropic strategy, and tax structures designed to operate across decades rather than a single retirement. Canadians at this level often have business interests, real estate, complex assets alongside traditional accounts. The planning involves coordinating across multiple specialized advisors, and the strategies reflect that complexity. Family trusts, including alter ego trusts or joint partner trusts, become useful tools for managing transfers, avoiding probate, and structuring the estate across generations. Charitable vehicles like donor advised funds and private foundations to serve both philanthropic goals and meaningful tax planning simultaneously. The involvement of adult children and grandchildren also becomes a real consideration. How do you transfer wealth in a way that creates opportunity rather than dependency? How do you build governance structures that hold across generations? These are family questions as much as financial ones. The planning horizon at this level isn't 30 years anymore. It's often 30 to 50 or more because the decisions made today will affect family members not yet born. Now that you see all five levels and what each one actually involves, let's bring everything together so you can see how to figure out where you stand and what that means for your planning. So the first step is a clear inventory. total retirement assets across RRSPs, TFSAs, non-registered accounts, any pension entitlements, and any meaningful real estate beyond your primary residence. And the second step is mapping that total against the levels we just walked through and being honest about which planning challenges are actually relevant where you sit right now. And the third step is focusing your planning energy on what actually matters for your level. A level two household trying to implement level four estate strategies is spending time on problems they don't have. A level four household operating on level one instincts is missing significant opportunities they should be acting on. What separates Canadians who plan well at every level from those who don't isn't the size of the portfolio. It's the integration.

[00:11:43]They treat their CPP and OAS timing, their RSP and risk strategy, their TFSA usage, their tax planning, and their estate plan as one coordinated system, not a set of separate decisions made in isolation. They also update the plan as things change. What's right at level two may need to be revisited when circumstances shift. Life doesn't stay static, and the plan should either. At every level, the goal is the same. A retirement that actually delivers what you built it for. So, now that you've seen the five levels of Canadian retirement wealth in 2026, what changes about your planning at each level, and how to figure out where you stand, you can stop applying generic retirement advice, and start focusing on the strategies that actually matter for your specific level. If you want help building a plan that fits your level and your situation, click that link below.

[00:12:34]You'll go to a page where I walk through what we cover in our retirement plan review, who it's for, and how the fee and guarantee work. From there, you can answer a few short questions, and if it looks like a fit, you'll be able to book a 15minute intro call. That call is where we learn more about your situation, and if it makes sense, invite you to the full 60inute review. I'll see you guys in the next video. Take care.